AGC Survey: Job Cancellations Show Increase
The Associated General Contractors of America released new data last week that found that deferrals, cancellations and disruptions to work have increased over the past month, suggesting a second wave of COVID-19-related issues for the industry.
“The survey results make it clear that the months-long pandemic is undermining demand for projects, disrupting vital supply chains and clouding the industry’s outlook,” said Ken Simonson, the association’s chief economist. “Without new federal relief measures, these challenges pose a significant threat to current construction employment levels.”
The biggest finding is that nearly 75% of survey respondents reported having scheduled projects postponed or canceled—this is up from the 60% that reported such in August, and the 32% who did so in June.
And, on the flip side, only 23% of contractors reported working on new or expanded projects as a result of the pandemic, which was about the same in June.
As for projects that are currently underway:
As a result, about 34% of respondents said they do not expect their firm’s volume of business will return to pre-pandemic levels for at least a year.
In addition, “Delays, disruptions and uncertainty threaten to undermine employment levels in the construction sector. In fact, 30% of firms report they have already furloughed or terminated employees because of the coronavirus,” the AGC says, pointing to the recent metro jobs numbers released in early October.
Last month, the AGC reported that construction employment increased by 26,000 jobs in September, but the gains were again concentrated in housing.
The AGC again noted that the employment in the infrastructure and nonresidential sectors remained little changed. The Association noted that the COVID-19 pandemic was prompting a strong demand for new housing as more Americans work from home.
“Construction is becoming steadily more split between a robust residential component and generally stagnant private nonresidential and public construction activity,” said Simonson, noting that in the three months since June, residential construction employment has increased nearly 3% while nonresidential employment has slipped 0.2%.
The AGC found that 38% of respondents—whose firms perform all types of nonresidential construction—expect it will take more than six months for their firm’s volume of business to return to normal, relative to a year earlier. That percentage topped the 29% who reported business was already at or above year-ago levels.
Simonson cites that increase in postponed or canceled projects for the pessimistic outlook, noting that that same survey found 60% of firms reporting a scheduled project had been postponed or canceled, compared to 12% that had won new or additional work as a result of the pandemic.
The employment pickup in September was mainly in homebuilding, home improvement and a portion of nonresidential construction. There was a rise of 22,100 jobs in residential construction employment, comprising residential building (6,600) and residential specialty trade contractors (15,500). There was a gain of 4,000 jobs in nonresidential construction employment, covering nonresidential building (5,300), specialty trades (2,100) and heavy and civil engineering construction (-3,400).
The industry’s unemployment rate in September was 7.1%, with 700,000 former construction workers idled. These figures were more than double the September 2019 figures of 3.2% and 319,000 workers, respectively.
The AGC believes that the nonresidential construction stalemate will likely continue while the pandemic persists without additional federal recovery measures, which again the AGC stressed, “must include liability protections for businesses that are protecting workers from the coronavirus, new infrastructure investments and funding for depleted state and local construction budgets.”
“Until businesses are confident enough to invest in new development projects and state and local governments are able to invest in public works, the commercial construction sector will not be able to fully recover,” said Stephen E. Sandherr, AGC CEO.
“Protecting honest employers, improving our infrastructure and helping state and local officials fix schools and improve other public facilities will create the jobs people need and the momentum our economy requires.”